Whether working on a low-income country or an advanced economy, it is important that macroeconomists be aware of issues in health economics and health policy. Health care has gained prominent recognition in development. The United Nations (UN) Millennium Development Goals (MDGs) set 10 specific targets to be achieved by 2015, of which three explicitly pertain to health. Research studies document that millions of households in developing nations are impoverished each year by health expenditures, retarding poverty alleviation efforts, and an emerging body of research shows that investments in health can have a significant effect on economic development (Bloom and Canning, 2000; Fogel, 2004; and Bloom, Canning, and Sevilla, 2004). HIV/AIDS has undermined the development prospects of a number of African countries and threatens to weaken the growth momentum of several important Asian economies. For middle-income economies, transition economies, and industrial countries, the challenge posed by the health sector for macroeconomists differs, but is no less daunting. Increasingly, pressures emerging from the health sector—in part owing to the aging of populations and in part due to the rapid pace of technological change in the medical sector—are affecting fiscal sustainability, inflation, and possibly even the current account of the balance of payments.
As a general rule, issues of health care policy have not generally been seen as the domain of macroeconomists. Only in recent years, with the report of the World Health Organization’s (WHO) Commission on Macroeconomics and Health (CMH) (WHO, 2001, 2002), has there been a greater focus on why health issues are relevant to macroeconomic policymakers and, in particular, ministers of finance. That report also provided further support for the prominence of health goals (for example, reduced infant and maternal mortality rates as well as reduced prevalence rates for HIV/AIDS, malaria, and tuberculosis) in formulating the MDGs. The CMH initiative principally sought to demonstrate that progress in improving health in low-income countries could be a critical factor influencing the growth potential of a country. In particular, the CMH report explored the various ways in which better health status could improve the quality of the labor force; enhance productivity, in both the short and the long run; limit the extent to which catastrophic illnesses can lead to households falling into poverty; raise household saving rates; and reduce fertility rates.3
Certain basic facts about the health sector and health care are not widely known. This section explains what macroeconomists should know on this subject as they participate in the formulation of health policies.
Although specific issues confront nations at different stages of development, several issues confront all nations throughout the world. We first present the universal issues, then the ones for each stage.
Like other socioeconomic systems, a health system is structured by state action or inaction to serve certain social purposes. A state makes conscious decisions in structuring the system to achieve certain objectives or takes no action, allowing the system to become a laissez-faire free market system. Simply put, a health system is a means to an end. It exists and evolves to serve societal needs. Under this paradigm, a health system is a set of relationships in which the means—structural elements of the system—are causally connected to the ends or goals.
This chapter presents an analytical framework to help macroeconomists understand health systems and assess health policy for countries at different stages of development. To state the obvious, the same health system structure cannot be applied to all countries. Systems differ enormously among countries, owing to variations in socioeconomic development. What works in the United Kingdom, say, may not work in Kenya. On the other hand, must every country be treated differently? Or can they be grouped into somewhat homogenous categories, and general conclusions drawn for each?
The CMH was initiated by the WHO as a means of providing an evidence base for economic and financial policymakers in low-income countries on why spending on health was more than simply a consumption good. It sought to make the case that higher spending on health could have significant economic benefits—in fostering higher productivity and growth, over both the short and long term; in making greater use of both available labor resources and even natural resources (where disease vectors may be limiting the capacity to utilize land or resources effectively); as a key instrument in addressing high rates of poverty; and in influencing critical demographic variables (in particular fertility rates) that may be a source of low productivity, dissaving, and low human capital formation.
This Selected Issues paper and Statistical Appendix analyzes fiscal costs associated with Poland’s accession to the North Atlantic Treaty Organization and European Union (EU). The paper highlights that Poland’s accession to the EU could result in fiscal costs in certain areas, especially in upgrading the infrastructure in transportation and utilities, and improving the environment. The legislative reforms and the establishment of the regulatory and administrative structures are also likely to entail costs, though these costs are more difficult to quantify. This paper also discusses fiscal management and restructuring in Poland.
This primer aims to provide IMF macroeconomists with the essential information they need to address issues concerning health sector policy, particularly when they have significant macroeconomic implications. Such issues can also affect equity and growth and are fundamental to any strategy of poverty reduction. The primer highlights the appropriate roles for the state and market in health care financing and provision. It also suggests situations in which macroeconomists should engage health sector specialists in policy formulation exercises. Finally, it reviews the different health policy issues that confront countries at alternative stages of economic development and the range of appropriate policy options.
This primer aims to provide IMF macroeconomists with the essential information they need in situations where they must address issues concerning health sector policy and when they have significant macroeconomic implications. Such issues can also affect equity and growth and are fundamental to any strategy of poverty reduction. The primer highlights the appropriate roles for the state and market in health care financing and provision. It also suggests the situations in which macroeconomists should engage health sector specialists in policy formulation exercises. Finally, it illustrates the different health policy issues that confront countries at alternative stages of economic development and the range of appropriate policy options.